More About:

Marking distinctions

Chambliss then asked Duffy to expand on his claims that many of the recent complaints about high frequency and equity markets simply don’t apply to U.S. futures markets.

“When you enter an order into the CME system, no one knows you’ve entered the order but yourself until it hits our match engine and the transaction is complete,” said Duffy. What was alleged in the 60 Minutes report regarding trades being seen by multiple exchanges “would be literally impossible in our world because of the way the market structure handles (trades). No one knows about an order but (CME). Also, in a vertical silo – which is what we operate in the futures market – people don’t have the ability to go outside our walls to race customers to different venues to beat them to a trade. If that’s going on in the securities world it should be punished.”

What is the next step at the CFTC? Is the commission considering a rule on automated trading practices?

“The commission has taken (public) comments to the staff level,” said Vince McGonagle, CFTC Director of the Division of Market Oversight. “The staff is evaluating those comments in order to come up with a recommendation. … We need to do a thoughtful, diligent review of the issues to see whether and where commission action is warranted.”

Duffy, who’d earlier in the hearing claimed that the traders want more speed in trades, was then gently chided by Stabenow. “I don’t know that’s true. … I think they want confidence and markets that they feel are stable and that they can use appropriately.”